Tim Feemster

Managing Principal, Foremost Quality Logistics

Area Development Special Presentation

Q2 2014

Texas — 15+ Million Population Category
In 2013 Chief Executive magazine ranked Texas as the best state for doing business. “The rankings prove that smart policies result in increased investments, jobs, and greater overall economic activity,” states Marshall Cooper, CEO of the magazine.

Texas led the nation in job growth for the fourth straight year, adding 252,400 jobs. More than 10 major industries added jobs in 2013, including professional and business services, education and health services, energy, construction, mining, IT, and manufacturing. Manufacturing employment in Texas has grown by 7.2 percent since 2010. The Lone Star State also led the nation in the total value of shipped manufactured goods.

The Texan economy is driven by energy production, especially in the highly productive, West Texas oil-shale deposits. Overall the energy sector contributes about $175 billion to the Texas economy. As a result, Texas is also the nation’s leader in petroleum refining and chemical production.

Five of the top-10 development projects are billion-dollar investments related to energy or chemical production. For example, Golden Pass is spending $10 billion to expand its liquefied natural gas (LNG) facility in Port Arthur, and ExxonMobil is investing $2 billion in its ethylene operations in Baytown. Ascend Performance Materials plans to construct a $1.2 billion, propane dehydrogenation facility in Alvin, creating 100 jobs. And, thanks to hydraulic fracturing needs, Tenaris SA is constructing a $1.5 billion facility to manufacture seamless pipe for the oil and gas industry. The facility is expected to produce 600,000 tons a year of casing and drilling pipe.

Other big announcements were made in the technology, customer service, and insurance sectors. For example, Flextronics recently opened its new manufacturing facility in Fort Worth ($25 million, 2,500 workers) to provide final assembly and customization for Motorola Mobility’s Moto X smartphone. In the field of customer care, Kohl’s Corporation will open a $54.9 million, customer-service operations center in Dallas, which will require 1,500 workers. The state of Texas will contribute $864,000 to the project through the Texas Enterprise Fund.

TOP 2013 INVESTMENT PROJECTS

Texas

Subsequent to this report being prepared, Motorola Mobility announced it would close its Fort Worth factory, operated by contract manufacturer Flextronics, by year’s end. Final assembly and customization of Motorola’s Moto X smartphone are taking place at the plant. However, poor sales of the smartphone and high operational costs are being blamed for the decision to close the plant.

Georgia — 8 to 15 Million Population Category
Building on a strong year in 2013, Georgia’s economy is expected to outperform the national economy in 2014. Thanks to a diverse economy that includes both traditional and knowledge-based industries, the state’s inflation-adjusted GDP is projected to grow 3 percent next year, with a 1.8 percent increase in jobs.
The automotive industry is a key employer in the state. Almost one quarter of the East Coast’s automotive-related exports come from Georgia (valued at nearly $10 billion per year). Over the last few years, auto manufacturers have invested $5.2 billion in their operations within the state. Major manufacturers include General Motors, Honda, Kia, Porsche, and Toyota — all of which are supported by an expanding supplier network. For example, Inalfa Roof Systems, a provider of vehicle roofing systems, is building a $17.1 million manufacturing plant in Cherokee County, resulting in 300 new jobs. The facility will build components for major OEMs like Hyundai, Kia, Ford, General Motors, Volvo, Chrysler Group, and BMW Group.

Georgia is also well known for its IT sector. The state has one of the fastest-growing information-technology markets in the country, with nearly 200,000 workers. Recent announcements include digital media company Medient, which is developing a $90 million movie and game production facility in Effingham County, creating at least 250 jobs. AirWatch, a leader in mobility technology and security, is expanding its headquarters in Atlanta, creating 800 jobs and investing more than $4 million in new equipment. The expansion is scheduled for completion in 2015.

“We expect to double our size by combining innovative mobile technology and exceptional talent with the state’s economic development resources,” states AirWatch Chairman Alan Dabbiere. “AirWatch and other software companies are playing a critical role in attracting new businesses to the region and solidifying Atlanta as a leading technology player.”

TOP 2013 INVESTMENT PROJECTS

Georgia

Missouri - 5 to 8 Million Population Category
Missouri added almost 44,000 jobs in 2013, some of the best job-growth numbers in the country. One reason companies are hiring is the favorable tax structure in the state — according to the Tax Foundation’s 2014 State Business Tax Climate Index, Missouri ranked seventh for the most favorable corporate tax structure in the U.S.

Top sectors are automotive, bioscience, information technology, energy, advanced manufacturing, life sciences, and transportation and logistics. Last year was a good one for automotive in Missouri — General Motors announced plans to invest $133 million in its Wentzville facility. Ford Motor Company is also expanding — the automaker is adding a third production shift for the F-150 and hiring an additional 900 workers at its Kansas City assembly plant, part of a $1.1 billion expansion.

Automotive suppliers also announced significant new investments, including Grupo Antolin North America ($16 million, 118 jobs) and Yanfeng USA ($45 million, 263 workers), which will manufacture interior trim components in Riverside for General Motors. “Missouri offers an excellent business climate and we are excited to join the state’s strong community of automotive companies,” states David Wang, president of Yanfeng USA.

Other hot growth sectors include IT and aerospace. According to the Tech America Foundation, Missouri had the third-fastest rate of technology job growth in 2013 and major IT announcements like Cerner Corporation ($4.3 billion, 15,000 jobs) and Express Scripts ($57 million, 1,600 jobs) back that up. In aerospace, Boeing is expanding its research facilities in St. Louis County and Aviation Technical Services will establish an $8 million maintenance, repair, and overhaul base at Kansas City International Airport, creating about 500 jobs in the next three-to-five years.

TOP 2013 INVESTMENT PROJECTS

Missouri

South Carolina — 3 to 5 Million Population Category
Manufacturing continues to drive the South Carolina economy. One of the greatest strengths of its manufacturing industry is the diversity of its sectors — aerospace, automotive, plastics, chemicals, food processing, textiles, and forestry products are all showing gains. For example, Keer is building a $218 million textile plant in Lancaster County; Harbor Freight Tools USA is undertaking a $75 million expansion of its distribution center in Dillon County; JN Fibers will build a $45 million facility in Chester County; and Colgate-Palmolive Company will build a $196 million plant in Greenwood County to manufacture hand soap. Combined, these four projects represent over 1,300 new jobs.

The transportation equipment manufacturing industry is especially strong in South Carolina. Boeing leads the way in aerospace, with its $1 billion expansion in North Charleston. For the automotive sector, South Carolina has recruited more than $5 billion in capital investment and more than 8,000 jobs since 2011. The state is home to more than 250 automotive manufacturing plants and continues to attract top-tier suppliers, such as ZF Transmissions, a global supplier of driveline and chassis equipment, which recently announced a $175 million expansion of its operations in Laurens County. This will be the third expansion in four years for ZF, bringing the company’s total investment in South Carolina to more than $600 million.

South Carolina also supports a booming tire-manufacturing industry, led by Michelin — South Carolina’s largest manufacturing employer. Nine of Michelin North America’s 18 production facilities are located in the state. Over the last several years the company has announced new projects totaling $1.15 billion, which will create nearly 900 new jobs.

TOP 2013 INVESTMENT PROJECTS

South Carolina

Utah — Fewer than 3 Million Population Category
Utah has one of the fastest-growing economies in the U.S. — its GDP growth rate of 3.4 percent was seventh-best in the country in 2012, driven by manufacturing and financial and insurance services. In 2013 the U.S. Chamber of Commerce called Utah a “boom state,” declaring it was the only state in the U.S. that placed in the top-10 for economic performance, infrastructure, business climate, exports, workforce, and entrepreneurship.

One reason Utah’s economy is so strong is because it is highly diverse, ranging from energy and traditional manufacturing to aerospace and defense, life sciences, nanotechnology, IT, electronics, telecommunications, and software development. Recent high-tech developments include SolarWinds’ (IT management software) plan to build a $50 million operations hub in Salt Lake City (1,040 jobs). Also in the Salt Lake City area, on-demand digital interviewing platform provider HireVue will invest $30 million to expand its operations center, creating 540 new jobs.

IT and telecommunications platforms are also critical for customer-support, fulfillment, and back-office operations, which continue to grow in Utah. For example, 1-800 CONTACTS, the largest retailer of contact lenses in the country, plans to invest $59 million to expand its Salt Lake City operations. In addition, Cardon Outreach, which works with healthcare providers to recover revenue and bad debt, is also expanding its operations in Utah, creating over 300 jobs.

“A very positive experience with our operations hub in Sandy has encouraged us to consolidate more of our back office operations from other processing centers to Utah, and to focus on Utah for our centralized service functions going forward,” says Mark Robinson, CEO of Cardon Outreach.

MethodologyArea Development’s annual Gold and Silver Shovel Awards recognize states for their achievements in attracting high-value investment projects that will create a significant number of new jobs in their communities. We collected information from all 50 states about their top-10 job-creation and investment projects initiated in 2013 (only those projects that actually had monies invested, “broke ground,” began an expansion, started new hiring, etc. were considered). Based on a combination of weighted factors — including the number of new jobs to be created in relation to the state’s population, the combined dollar amount of the investments, the number of new facilities, the diversity of industry represented — five states achieving the highest weighted overall scores are awarded Area Development’s 2014 Gold Shovels in five population categories: 15+ million, 8+ to 15 million, 5+ to 8 million, 3+ to 5 million, and fewer than 3 million. Runners up in each of these population categories are awarded 2014 Silver Shovels.